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4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
4 arrf investment presentation   april 2012
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4 arrf investment presentation april 2012

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  • 1. The Asia Renewable Resources FundA Dedicated Fund of the KMG SICAV – SIFAn open ended investment fund acquiring high quality and high value forestry assets andland opportunities aiming to provide investors with strong growth potential in the shortto medium term with typical investment horizons of circa 5 years.March 2012 Treedom Investments Ltd Tel: +66 (0) 2 259 6455 54 B.B. Building, 7th Floor, Fax: +66 (0) 2 259 6456 Office # 3705, Sukhumvit 21 Road (Asoke) Klongtoeynua, Email: Julian.bulman@treedom.biz Wattana, Bangkok 10110DisclaimerThis document is not an offer or solicitation in any jurisdiction in which such offer is not authorised. Nothing in it should be construed as advice and is therefore not arecommendation to buy or sell shares/units Past performance is not a guarantee of future returns. The value of investments may fall as well as rise.Any decision to invest should be based on a full reading of the Offering Document and the most recent financial statements (if available). In case of any discrepancybetween this presentation and the Offering Document in force, the Offering Document shall prevail.
  • 2. Presentation Agenda 1. Executive Summary • Overview • Opportunity and Rationale • Investment Criteria • Investment Policy 2. Managed Forestry Projects • Teak – Global Market Overview • Agarwood • Oil Seed Trees 3. Acquisition Strategy • The 10 Key Investment Criteria • Competitive Edge • Investment Flowchart • Acquisition Process • Acquisition Due Diligence 4. The Treedom Group • Treedom Investments Limited • The Treedom Advantage 5. Fund Terms and Structure 2
  • 3. 1. Executive Summary - OverviewKey Fund InformationThe Asia Renewable Resources Fund’s policy is to generate consistent returns achieved through a diversifiedportfolio of sustainable and renewable forestry resources. The Fund will enable investors to benefit from theanticipated strong trends and future growth in the managed forestry sector.Investment ObjectiveThe investment objective of the Asia Renewable Resources Fund is to achieve long term capital growth throughinvestment in high value forestry assets and land opportunities to develop sizeable returns from forestryoperations. The Asia Renewable Resources Fund may also invest into transferable securities to enhance liquidityand diversification.The TeamA experienced team of professionals with wide ranging experience in capital raising, investment and operations.This opportunity has brought together a first class team combining experts in fund management, capital andprivate equity fund raising and forestry management, acquisition, operations and development.ReturnIt is envisaged that the Fund will be able to provide a stable and predictable level of growth. The aim is to providea minimum 12% IRR per annum though higher returns are possible.The FundSpecialised Investment Fund (SIF). The Asia Renewable Resources Fund is an open ended SICAV – SIF domiciledand regulated in the Grand Duchy of Luxembourg Target Fund Size $100m USD (+). 3
  • 4. Opportunity and Rationale“Globally, forests play a vitally important part in the carbon cycle. As a renewable resource theyoffer unrivalled returns for equity investors”The right timing.The Asia Renewable Resources Fund offers investors an opportunity to reap the rewards from investments insustainable and financially lucrative project-based forestry investments; with these investments projected toinclude forestry, carbon credits, plantation timbers and Oil Seed Trees (OSTs).High stable returnsThe Agro Forestry sector has traditionally been seen as a safe haven for investors during tough economic times.Timber and forest asset classes have been invested in for centuries and are seen as very stable returns becausethe investors are able to see their assets “growing” due to the organic biological activityPrime Sector for GrowthAs an asset class forestry investment and “agro forestry” in particular offers equity and quasi-equity investors theopportunity to enter a sector which has a stable and predictable return strategy over the short, medium and longterms.With low correlation to other commodity and asset classes timber and associated products are sheltered to alarge degree from economic downturns and offer a prime investment opportunity for primary and secondaryinvestors.See Figure 1 below which gives an investment insight into short, medium and long term strategies employed bythe Fund and their associated carbon offset and plantation management aspects. 4
  • 5. Figure 1 – Investment Insight 5
  • 6. Investment CriteriaForestry and Land assets will be sourced that can deliver high growth potential and that are potentially incomeproducing from day of purchase.Forestry, Agro Business and Land Investment CriteriaAsset Base• Multi species and multi sector focus with a modern agro business outlook that comply with current and future international regulations and standards.• Internal Operational Strategy to ensure compliance to best practice management of assets.• Strategic geographical locations across the Asian region identified and purchased/leased as demand increases in each sector• Pipeline of “prime” and “over geared” target acquisitions identified along with an integrated development plan.• Product diversification to offset risk and to increase profitability of assets.Target Minimum Equity Returns• Projected minimum 12% IRR• All assets purchases will be tested against their ability to return this minimum ROI prior to purchaseManagement• Annual audit of the Fund by professional auditors – Deloitte• Bi-annual management reporting on fund activities• Appropriate fee levels to reflect actual performance of Fund• Understanding the need for better standards for care in our environment whilst creating profit. 6
  • 7. Investment policyThe Asia Renewable Resources Fund primary objective is to provide capital growth by investing in a portfolio ofagro forestry products and forestry. The aim is to achieve this through investment as identified by theInvestment Adviser. An independent third party forestry expert will be retained by the Asia RenewableResources Fund and will review the Investment Adviser’s recommendation and provide their approval to theGlobal Investment Manager.Offering investment in both long and short term rotation forestry assets, the aim will be to diversify theportfolio but not limited to the distinct categories below. • Forestry Assets producing high value essential oils – for example Sandalwood oil or Oud oil • High Value long term timber Assets – such as teak, mahogany, ebony, & rosewood • Forestry Assets aimed at deriving an annual income stream such as Milletia Pinnata primarily for the bio fuels market or Para RubberThe Asia Renewable Resources Fund strategy will be to invest in land opportunities and look to cover a broadbase of forestry species ensuring income will be derived at multiple junctures and thus not reliant on largerevenues at harvest; which in some cases can be a lengthy period of time. Investment in new growthplantations is aimed at significantly increasing profitability as high growth rates ensure above average financialperformance due to increased and quick asset growth, however that does not preclude that the acquisition ofexisting mature plantations will not be given due consideration.As part of the overall investment strategy and to assist with liquidity the Asia Renewable Resources Fund willhold between 10% to 20% of the Asia Renewable Resources Fund assets in transferable securities such asforestry sector exchange traded funds, and UCIs (Undertakings for collective investment) which have exposureto the forestry sector. 7
  • 8. 2. Managed Forestry ProjectsAn identified industry issue with Managed Forestry Projects and the Forestry companies that inhabit this space istheir exposure to a single species in single locations.The Asia Renewable Resources Fund intends to address any risk concerning the market movement for a singlespecies by adopting a multiple species approach. Initially, the advisers will address a number of potential projectswhich may include plantations that are considered distressed.The Asia Renewable Resources Fund will initially invest in the following asset classes which are explained in moredetail on the following pages:• Teak - Teak wood is very strong and durable, resists white ants and contains oil which preserves nails, a property which enhances its value in the construction, furniture and decorative industries.• Agarwood - Agarwood is a tree that produces an essential oil named Oud. Oud oil is used for a variety of purposes and is a highly prized commodity.• Oil Seed Trees – The renewable energy sector specifically the growth and culturing of various species for use as alternative fuel sources• Oil Palm - A multi-use crop, the fruit can be used for fuels, food or the oleo-chemical industry.• Bamboo – 2nd Fastest growing plant in the world, uses such as furniture, food, construction and many more.Below are examples of primary target acquisitions. 8
  • 9. Teak – Global Market OverviewBotanically called Tectona Grandis, the Teak is a native of the deciduousforests of India and Burma and naturally its cultivation is encouraged in theforestation programmes of the Government of India and in the recent pastwe have seen Teak grown in large numbers wherever climatic conditions arefavourable for it. It is mainly grown for its highly valued timber. This longlifespan is an argument against its cultivation, but commercially grown Teak isusually thinned from around years 8-10 and then finally harvested aroundyears 15-20, which still gives a high return value for the full tree. 9
  • 10. AgarwoodAgarwood is a resinous wood that occurs in trees belonging to the Aquilaria genus,Thymelaeceae family. Now listed as an endangered species as defined by CITES,Aquilaria is a fast growing, archaic tropical forest tree. It is found generally in South andSoutheast Asia, from the foothills of the Himalayas to the forests of Papua New Guinea.The tree grows in natural forests up to an altitude of about 1000 metres, with an idealaltitude of 500 metres. It can grow in a wide range of soils including poor sandy soil.The heart of the Aquilaria is known as Agarwood. Within the wood an essential oil isformed as an antibody to a fungal infection. This essential oil is called Oud• Oud Oil is commonly used throughout the Muslim world as a perfume.• It is used by the fragrance houses of Europe as a base for their retail perfume brands.• The value of first grade Agarwood is extremely high.• A wide range of qualities and products are generally available with geographical location and cultural disposition being the main determinants of quality.• Prices range for lower grade Agarwood from a low of US$ 1000 per kilo to in excess of US$ 30,000 per kilo for the higher grades of Agar Oil (Oud) and resinous wood, thus giving it the name of "liquid gold".• Agarwood is also a commodity in its own right as it is used in various ceremonies within several religions. 10
  • 11. Oil Seed TreesThe development of a renewable energy market has seen a demand for feedstock supply increase – this can bederived from various trees producing pure plant oil or from woodchip supply. Grown in correct conditions, OSTsare extraordinary generators of two forms of biomass. The first is a vegetable oil that can be chemically reacted toproduce biodiesel; while the second is biomass that can be processed to a number of renewable energy basedend uses.This group of plantations hold significant opportunities for The Asia Renewable Resources Fund. The feedstocksused in oil applications (bio-fuels, vegetable oils, essential oils etc) are many and varied.The Fund will initially target high yield bio-fuel type feedstocks, however over the longer term the Fund via itsacquisition strategy will investigate opportunities in all oil production spheres; examples of areas of significantinterest:• Jatropha oil • Castor oil • Salicornia oil• Honge oil • Coconut oil • Soybean oil• Jojoba oil • Colza oil • Sunflower oil• Nahor oil • Corn oil • Tigernut oil• Paradise oil • Cottonseed oil • Tung oil• Petroleum nut oil • False flax oil• Copaiba • Hemp oil And various other edible• Radish oil • Mustard oil and essential oil asset• Rapeseed oil • Palm oil classes.• Ramtil oil • Peanut oil• Rice bran oil • Safflower oil 11
  • 12. 3. Acquisition StrategyThe 10 Key Investment Criteria1. Take a flexible and rational approach through excellent networks and contacts to continually find the right deals where we can promote re-forestation and the sustainable management of existing forestry resources.2. Take a diversified portfolio approach with mixed assets and locations to control risk appropriately.3. To own the operating platform to capture profitability effectively, while also having the ability to integrate new opportunities.4. Seek to achieve significant returns with less volatility by choosing existing and profitable target acquisitions in key locations. Provide liquidity in the fund to accommodate our investors changing circumstances.5. To have a strong emphasis on capital preservation and protection allowing the Fund to Protect the interests of both fund investors and local communities.6. Benefit from the ongoing financial crisis by acquiring realistically priced opportunities offering excellent potential to generate high yields and capital increases for the portfolio.7. To maximise gains from capital growth and operating profits. All acquisitions and disposals of fund assets to be independently audited and further independent fund audits at 6-monthly intervals.8. The right selection and assessment of value of our target acquisitions will be a critical success factor for ascertaining future income potential and growth.9. Partner with local communities creating work opportunities and forestry industry training.10. Sourcing the ideal location and projects where the demand for product is extremely high. 12
  • 13. Competitive Edge • Strong entrepreneurial spirit, open minded and highly motivatedManagerial • Strong desire for better standards within the managed forestry and Agro business sectors Quality • Incentivised by performance • Innovation culture within group Proven • A strategic growth plan to create a market leading forestry and agro business portfolio and Business investment proposition Model • History of working with high net worth and institutional investor groups • Highly responsive action to the needs of investors • Proprietary financial models to comprehensively evaluate asset dynamics • Detailed risk and stress calculators to rigorously test assets against market volatility Approach • Regular due diligence of quantitative reports against asset classes • Established investment and holding process • Focus on new assets without the legacy of pre-2008 debt issues • Dedicated investment and management infrastructure in-houseEffectiveness • Minimal transaction costs achieved through professional advisers • Competitive fees for management, legal and accounting 13
  • 14. Investment Flowchart• Select best possible target Deal acquisitions and their operators Execution• Identify and generate deals that provide best returns • Buy according to • Disciplined management of• Use of experience, market strategy and assets and the Fund knowledge and network to investment policies • Active portfolio effectively target asset • Structure and management• Investment assets are negotiate deals that • Build and maintain selected in changing market compliment successful relationships with conditions that can deliver objectives investors higher returns • Internal control • Add value due to Treedom system based on Groups operationalJudgmental analyses and collaboration and experiencestringent compliance rigorous assessment • Devise clear exit strategiesundertaken when identifying • Effective decision as the opportunity occurstargets which offer the best makingopportunity and can deliverstrong returns Planning Active portfolio & management Sourcing 14
  • 15. Acquisition Process • Origination of suitable assets that fit the investment criteria • Detailed financial modelling and stress testing Origination • Discussion of asset and possible approach to lenders to leverage purchase • Preparation and review of targets information memorandum • Preparation of formal letter offer in line with approved guidelines • If offer is accepted a full heads of terms is prepared for full exclusivity Offer • Preparation of financing terms (including any debt structure agreed) • Equity moved to escrow from the Fund and full KYC undertaken • Due diligence undertaken by legal counsel to include any regional and local laws • Asset is inspected and valued internallyDue Diligence • Credit committee documents are drawn up • Bank and the Fund are presented with a valuation by our valuers • If due diligence and credit committee are successfully passed, acquisition is acquired with either funds held in escrow or via credit agreement with a lending bank or a combination Closing thereof • Asset management of acquisition begins in accordance with asset management plan 15
  • 16. Acquisition Due DiligenceThe Asia Renewable Resources Fund intends to source projects that include aspects deemed desirable includingcountry benefit, projected profitability, carbon aspects, biodiversity, community, flora, fauna, market potential,risk, security and conservation potential. The acquisition process will balance a complex array of biological,operational, and economic considerations including a reliable evaluation and projection of the following: • Timberland inventory data • Growth and yield of inventory • Harvest scheduling plans • Other non-timber revenues • Timber product mixes and prices • Silvicultural benefits and costs • Biomass processing • Refining of produced oil • Management costs • Conservation and environmental services values • Road and infrastructure costs and expenses • Land Title • environmental, and access issues • Potential exit strategy 16
  • 17. 4. The Treedom Group Treedom Investments Ltd A Seychelles registered company and Investment Adviser to the Asia Renewable Resources Fund. Key Staff: Andrew Steel, Steve Griffin. Key staff; David Smith, William Raper, Patrick Mulcahy, Julian Bulman. Equitech Ltd A Thailand domiciled entity that will be appointed by the Investment Adviser to identify and value prospective projects for potential investment by the Asia Renewable Resources Fund. Directors: Andrew Steel. Key Staff; Steve Griffin, Roger Steinhardt, Dr Paiboolya Gavinlertvatana, Julian Bulman. Asia Forestry Management Ltd A Thailand domiciled company that will be appointed by the Investment Adviser to manage plantation and forestry assets held within the Asia Renewable Resources Fund. Directors; Andrew Steel, Steve Griffin, Key Staff: Roger Steinhardt, Dr Paiboolya Gavinlertvatana. Asia Forestry Distillery Ltd A Thailand domiciled company that will be appointed by the Investment Adviser to process and market Oud oil from Agarwood assets held within the Asia Renewable Resources Fund. Directors: Andrew Steel, Steve Griffin. Key Staff: Les Weaver, Roger Steinhardt. The PATT Foundation The PATT Foundation is a UK registered Charity, recognized by the United Nations, which is within the Treedom Group of Companies, but will have no working relationship with the Investment Adviser or the Asia Renewable Resources Fund except for receiving donations from Treedom Investments Limited fees and from Asia Renewable Resources Fund investors who opt-in voluntarily. 17
  • 18. Treedom Investments LimitedInvestment Adviser - Forestry AssetsTreedom has identified an opportunity arising from an existing gap in the market for a new andinnovative style of investment Asia Renewable Resources Fund. Established in 2010 the companybrought together a dedicated team of individuals with over 80 years combined experience in theirvarious field. Each with skills specifically relevant to advise on investments in the forestry sector. Ithas arisen from the current rapid adoption of green products and investments by institutions andindividuals.Treedom provides a unique opportunity to generate returns for investors via the provision offorestry investment products which, in parallel, take due regard to people, communities and theenvironment.In summary, Treedom has positioned itself, via a fund vehicle; to offer a socially responsibleinvestment that delivers triple bottom line benefits of People, Planet, Profit by investing in forestrybased assets. 18
  • 19. The Treedom Advantage 1. Impeccable reputation locally and globally 2. Strong fund management with international education and training 3. Best in breed Corporate Governance and investment processes and policies 4. Strong emphasis on current risk management techniques 5. Strong Forestry management team with proven local and international experience 6. Impressive track record in forestry management, corporate finance, fund raising and strategic alliances 7. Extensive global network of affiliates 8. Access to the best possible deal pipeline in the Asian region and the rest of the world 9. Extensive fund raising and distribution experience 10. Extensive regional team on the ground in Asia 19
  • 20. 5. Fund Terms and StructureFund StructureThe Asia Renewable Resources Fund is structured as a regulated SICAV – SIF in the Grand Duchy of Luxembourg,specifically it is a dedicated fund of the KMG SICAV – SIFLuxembourgCentre of Excellence: outstanding reputation as a world class centre for the investment fund industry combinedwith a legal and fiscal environment that attracts fund promoters from all of the world.Stable Democracy with a strong economy: very stable political and social environment, it is the worlds least riskybusiness environment (World Market Research Centre).SICAV SIFA SICAV SIF is an onshore Luxembourg investment fund fully regulated by the Commission de Surveillance duSecteur Financier (CSSF) created in February 2007 via the Special Investments Funds law. A SIF offers a fullyregulated investment structure that is flexible, efficient and tax optimised; investors participate via subscription inshares in the SIF through which they hold their investment fund.The Asia Renewable Resources Fund will be managed under the KMG Capital Markets Luxembourg S.A. SICAV SIF(KMG SICAV SIF).TaxationThe Asia Renewable Resources Fund will not be subject to Luxembourg taxes on capital gains nor income andthere is no liability to withholding tax on distributions, including the redemption of shares. Distributions made bya SICAV SIF or capital gains realised from the sale, refund or repurchase of shares in a SICAV are out of the scopeof EU Savings Directive since it is not subject to “UCITS” rules. Additionally, Luxembourg has concluded around 50double taxation treaties and it should be possible to structure an investment to benefit from one of these doubletax treaties.A SICAV SIF is, however, subject to a capital duty, levied at the time of creation or subsequently – in particularwhen new contributions are made or when a fund is converted or merged. An annual subscription tax of 0.01% islevied, based on the quarterly net asset value. Investors should always consult professional advisers with regardsto taxation advice. 20
  • 21. Fund Terms and Structure Minimum Investment: $10,000 USDIt is intended that The Asia Renewable Resources Fund will seek Reporting Fund status for the purposes of UK tax legislation on the GBP Share Classes.* The Investment Adviser will direct 10% of all fees earned to the PATT Foundation to support reforestation efforts globally.Investors have the option to donate a percentage of their returns back to the PATT charity. Above 8% performance and after payment of performance fees - balance to go to PATT. Above 8% performance and after payment of performance fees - 1 or 2% to go to PATT. 1 or 2 % to go to PATT irrespective of performance. 21
  • 22. Legal NoticeThe Asia Renewable Resources Fund & KMG SICAV – SIF have no intention to make any offer. This presentation (the presentation)shall be specifically considered as a simple communication of information on a security or an issuer without securities being offeredfor purchase or subscription. The issuer is exempted from the obligation to publish a prospectus within the scope of Part II ofLuxembourg law on prospectuses for securities.This communication is directed only at institutional investors, professional investors, wealth managers and other well-informedinvestors who are classed as well informed investors. It should not be distributed to, or relied on by any other investors. The Fund is aLuxembourg Specialised Investment Funds scheme; it cannot be promoted to investors for whom it has not been deemedappropriate. If you do not fall into these categories do not read this document.The information contained herein is confidential and is intended only for the persons to whom it is transmitted to by and on behalf ofThe Asia Renewable Resources Fund & KMG SICAV – SIF . Any reproduction of this document in whole or in part, or the divulgence ofany of its contents, without the prior written consent of The Asia Renewable Resources Fund & KMG SICAV – SIF , is prohibited.Each interested investor shall be responsible for carrying out his own examination and consulting, if necessary, his own legal advisersin order to evaluate, in respect to his personal situation, the appropriateness of an investment in the The Asia Renewable ResourcesFund & KMG SICAV – SIF . The investor’s attention is drawn to the fact that the tax treatment that will be applied to investment in theFund depends on his particular circumstances and may change. Therefore it is recommended that each investor consult with his taxadviser.More specifically, the attention of potential investors is drawn to the risks associated with this investment, which are detailed in theOffering Document and it is strongly recommended that each potential investor consult this Offering Document. Past yields of similarinvestments are no indication of future returns on investments that The Asia Renewable Resources Fund & KMG SICAV – SIF will carryout, as past performance is no guarantee of future results. Some legal, tax, or regulatory changes may occur during the life of the TheAsia Renewable Resources Fund & KMG SICAV – SIF , and may have an unfavourable effect on the performance of the The AsiaRenewable Resources Fund & KMG SICAV – SIF . There is no guarantee that the Funds targeted returns will be achieved. Hence,potential investors must form their own opinion on the risks of this investment opportunity prior to taking the decision to invest inthe The Asia Renewable Resources Fund & KMG SICAV – SIF . 22

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